Government secures ¢1.9bn from 6-year, 3-year bonds; sale marginally undersubscribed

The government of Ghana secured a total of ¢1.9 billion from the sale of 6-year bond and a tap issue of 3-year bond, which was marginally undersubscribed.

This is coming a day after the Finance Minister, Ken Ofori-Atta, announced a 30-per cent cut in expenditure of Ministries, Municipal Assemblies, Departments and Agencies (MMDAs), which was expected to bring investor confidence into the economy.

The target for the sale of the two medium term bonds was ¢2.0 billion.

According to the trading results by the Bank of Ghana, the new 6-year bond raised ¢1.32 billion at a coupon rate of 21.75 per cent, while the 3-year bond tap offer raised ¢606 million at a yield of 20.50 per cent.

Analysts say the pricing were in line with the second market levels.

The downgrade of the credit rating of Ghana from B to B- and the associated uncertainty regarding government finances remain an upside risk to yields.

However, the government’s smart move to reduce expenditure of all public sector institutions will help improve and address the risk to outlook. This has yielded positive results as Eurobonds yields have declined marginally by over 30 basis points (0.3 per cent).

Government secures ¢923.79m from 5-year bond at higher cost

Government in December 2021 mobilised ¢923.79 million from the issuance of a 5-year bond, but that came at a higher cost of 21 per cent.

The government accepted all the bids of ¢923.79 million from the investors.

But the cost of the debt instrument was above the initial pricing guidance of 20.50 per cent.

However, the rate was expected because investors had raised concerns about the fiscal outlook of the Ghanaian economy which is characterised by rising debt, arrears, amongst others.

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